PacifiCorp Application to Sell Coal Mining Assets

Background

PacifiCorp, a multi-state utility that serves customers in California’s Del Norte, Modoc, Shasta, and Siskiyou Counties, has filed an application with the CPUC requesting permission to sell numerous coal mining assets located in Utah but partially paid for by California ratepayers. The purchaser is a private coal company named Bowie Resource Partners.

The mining assets include an exhausted coal mine that previously supplied coal to one of PacifiCorp’s power plants (Deer Creek), a coal preparation plant (used for preparing coal for burning in PacifiCorp’s Utah power plants), and an equipment warehouse. These assets were part of a larger transaction that also included execution of two new agreements for coal supply to PacifiCorp’s Hunter and Huntington power plants and the coal mining rights at the undeveloped Fossil Rock Mine. The Fossil Rock contains approximately 40 million tons of coal valued at $1.5 – $2 billion.

ORA filed its testimony on PacifiCorp’s application on July 11, 2016 (see below).

ORA Position

In testimony, ORA supported viewing the transaction as a whole and not as individual, isolated components as PacifiCorp has proposed. The sale was executed as a single transaction and the effects of the transaction as a whole will have broader consequences than their individual components might on their own. PacifiCorp has also retained an interest in the transaction in the form of a royalty agreement with Bowie for coal mined at Fossil Rock.As outlined in ORA’s testimony, it is reasonably foreseeable that Bowie will mine the Fossil Rock coal reserves and export the coal to Asia through California ports, especially Stockton, Richmond, and Oakland. Coal prices are substantially higher in Asia and Bowie has clearly outlined its plans to expand export capacity through Oakland and to develop the Fossil Rock mine.

The mining of Fossil Rock and the export of coal through and out of California have the potential for substantial health & safety, environmental, and financial impacts on Californians and California ratepayers. These include: